Dinkins Faces Service Cuts To Big Apple

RAISING taxes and cutting services are twin taboos for political leaders in election years. New York City Mayor David Dinkins, who hopes to win a second term next fall, is likely to avoid the first pitfall but may yet be caught in the second.

His new $31.4 billion budget for fiscal 1994 beginning July 1 includes a potential revenue gap of $500 million or more. Mayor Dinkins long ago promised New Yorkers he would not raise property taxes and hopes to bridge the shortfall with state and federal aid from his Democratic colleagues - New York Gov. Mario Cuomo and President Clinton.

Yet little of the expected outside help may be forthcoming.

With a Democrat back in the White House, the Dinkins administration assumed that "the [US] Treasury would be open," says Joseph Giacalone, an economist at St. John's University. "I don't think that's yet the reality. The jobs package didn't get through. That means Dinkins has a summer-job problem that's not likely to be resolved by Washington."

Most of the money New York City will get from Washington will be earmarked for specifics such as Head Start and community development.

The New York Legislature, which has not approved any of the new city tax hikes proposed by the mayor, has shown little inclination to offer much other help, including any takeover of the city's unusually high 50 percent share of state Medicaid bills.

If the expected state and federal aid does not come through, Mayor Dinkins says he would cut city-financed day-care efforts and outreach programs for the homeless. A number of other trims, including a slice in city park and playground maintenance costs, are already in the budget.

Both City Council President Andrew Stein, the mayor's leading rival in the September Democratic primary, and former United States Attorney Rudolph Giuliani, the expected major GOP contender in the November election, say Dinkins is a poor financial manager and has failed to make needed tough decisions. Mr. Giuliani, who lost to Dinkins by a very slim margin in the last mayoral election and is again running close in the polls, insists that much of this year's budget gap is due to the mayor's abandonment in

January of a long-held negotiating position with city unions.

For two years Dinkins has argued that any salary hikes must follow and be financed by productivity improvements. In an accord reached early this year with the largest municipal union, covering more than half of all city workers, Dinkins agreed to what is widely considered a modest wage hike that will cost the city an extra $428 million next year. Yet the parties agreed to continue talks on productivity steps.

"That was putting the cart before the horse - a major step backward from what was probably Dinkins's best policy stance since he took office," says Dean Mead, a senior research associate at the Citizens Budget Commission, a 61-year-old fiscal watchdog group.

Mayor Dinkins has made some headway in trimming the city's work force. His critics, however, say he has not kept at the job consistently enough and that recent hiring of more police and teachers have canceled some of the gains. They also say that no amount of downsizing can substitute for needed structural reforms.

Charles Brecher, research director of the Citizens Budget Commission, says New York needs such reform more than most cities because it was so hard hit in the recent recession. In addition to losing about 9 percent of its economic base over the last three or four years, the Big Apple, he says, has major debts coming due from extensive borrowing in the 1980s for capital improvements. Part of the answer, he says, is more efficient service delivery. Contracting out such work to private industry or nonprofit groups can help, he says, but productivity initiatives also can and should involve regular city workers.

Strong labor support was considered crucial to Dinkins's victory in the last election. Yet Ester Fuchs, a political scientist at Barnard College and author of a book titled "Mayors and Money," says she thinks Dinkins is in a strong position politically to "stand tough" in future labor negotiations. Talks continue, for instance, with city teachers who have been working without a contract for the last year and a half.

"Dinkins has always taken the unions very seriously," Dr. Fuchs says, "but in my view, none of the unions has any other game in town. Rudolph Giuliani is not going to give them a better deal than Dinkins's worst deal."